BOC seeks record 20b yuan at home
Bank of China, the mainland's second-largest bank, is aiming to trade its shares on the Shanghai stock exchange by July 5 after raising a record 20 billion yuan from a domestic initial public offering.
The country's leading foreign-exchange lender yesterday began marketing the A shares at an indicative price range of three yuan to 3.10 yuan each.
The range, valuing the bank at up to 2.76 times book value at the end of last year, fuelled the share prices of other listed lenders.
With the exception of Shenzhen Development Bank, four other mainland-listed lenders - China Merchants Bank, China Minsheng Banking Corp, Shanghai Pudong Development Bank and Huaxia Bank - saw their stock prices rise yesterday.
The banking stocks closed at 1.63 to 3.03 times book value.
'We are expecting a 20 per cent upside for Bank of China's A shares,' a Beijing-based fund manager said.
'That will help raise the other domestic banking stocks' valuations.'
BOC has set its share offer size at 20 billion yuan, the fund-raising ceiling promised to international investors in its US$11.2 billion Hong Kong flotation that began last month.
It is set to eclipse the 11.8 billion yuan offer by oil giant Sinopec Corp in July 2001 as the largest domestic listing and could rank as the second-largest domestic share sale after the 25.6 billion yuan secondary offering by Baoshan Iron & Steel, the Shanghai-listed unit of the mainland's largest steelmaker.
Following the share offering, BOC will become the largest domestically listed company by market capitalisation and the first mainland bank listed in Hong Kong and domestically.
The number of shares it will sell depends on the final pricing which is expected on June 22, according to the prospectus.
BOC is earmarking 20 per cent of the offering or 3.96 billion yuan worth of shares to 14 domestic strategic investors, including Hong Kong and New York-listed China Life Insurance and its mainland parent, Hong Kong-listed PICC Property and Casualty and Ping An Insurance (Group).
Their holdings will be locked up for 18 months.
A further 32 per cent of the A shares have been reserved for other institutional investors, with the rest going to retail subscribers, subject to a clawback option.
BOC's H shares closed unchanged in Hong Kong yesterday at $3.375, 3.23 times the bank's book value and 14.4 per cent above the offer price of $2.95.